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Exam 6: Inventory Control Models

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Question 41

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The annual demand for a product has been projected at 2,000 units.This demand is assumed to be constant throughout the year.The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost.Currently, the purchase cost is $40 per unit.There are 250 working days per year.Whenever an order is placed, it is known that the entire order will arrive on a truck in 6 days.Currently, the company is ordering 500 units each time an order is placed.What should be the reorder point (excluding any safety stock) under the current policy?

A) 48
B) 100
C) 6
D) 24

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Question 42

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Consider the material structure tree for item A above.If 30 units of A are needed, how many units of D are needed?

A) 530
B) 560
C) 460
D) 420

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Question 43

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Demand for local newspapers in King County during weekdays is normally distributed with a mean of 500 and standard deviation of 100.The marginal loss per paper is $0.10 and marginal profit is $0.40.How many newspapers should the local publisher produce each day?

Inventory is such an expensive asset that it may account for as much as 50 percent of a firm's invested capital.

Which of the following factors is not included in carrying cost?

The concept of inventory is applicable to both manufacturing and service organizations.

Inventory is the common thread that ties all the functions and departments of the organization together.

Service level is the chance, measured in percent, that there will be a stockout.

SAP, Oracle, and PeopleSoft are all examples of

East Valve Distributors distributes industrial valves and control devices.The Eastern control device has an annual demand of 9,375 units and sells for $100 per unit.The cost of ordering is $160 per order and the average carrying cost per unit per year is $0.75.Determine the economic order quantity.

The same ratio of marginal loss to the sum of marginal loss and marginal profit is used to solve one-period inventory models for both discrete and continuous probability distributions.

The objective of a(n) ________ system is to reduce costs by integrating all of the operations of a firm.

Salaries and wages for warehouse employees would be categorized as ordering cost factors.

Andre Candess manages an office supply store.One product in the store is computer paper.Andre knows that 10,000 boxes will be sold this year at a constant rate throughout the year.There are 250 working days per year and the lead-time is 3 days.The cost of placing an order is $30, while the holding cost is $15 per box per year.If Andre orders 500 boxes each time he orders from his supplier, what would his total annual inventory cost be (holding cost plus ordering cost) ?

A professional baseball organization chooses to sell game day programs.Demand for game day programs is normally distributed with a mean of 2,000 and standard deviation of 300.If the marginal loss is $1 and the marginal profit is $3, how many programs should the baseball organization print?

Which of the following factors is not included in ordering cost?

Consider the material structure tree for item A above.If 30 units of A are needed, how many units of D are needed if there are already 15 B's, 40 C's, and 100 D's in inventory?

Which of the following is not a benefit of a well-developed ERP system?

The campus bookstore knows from the past several semesters that a certain elementary statistics book has a demand that is approximated by a normal distribution with a mean of 250 and a standard deviation of 40.They buy these books for $105 each and sell them to unsuspecting undergraduates at $222 each.All demand for this book is realized by the middle of the semester, at which point the bookstore bundles them up and sells them to a vendor in another country for $40 each.What is the probability of sale for the last book that the bookstore should purchase for sale to a student?

Discuss why it is sometimes prudent not to order the minimum level required to obtain a quantity discount.